MAKING CHANGES

JOS CARLOS MARITEGUI UNIVERSITY

FACULTY OF LEGAL, BUSINESS AND EDUCATIONAL
Students:
Celia Mamani Canaviri
Rolando Farfn Castro
Mily Llanos Mendoza
Intermediate English II
Lic. TERESA ARIAS VARGAS

ACCOUNTING - IV

Semi-Presential
CHANGES IN ACCOUNTING POLICIES

DEFINITIONS
Situations that require some accounting policy is changed in a commercial
enterprise, thereby causing changes in the financial information prepared in a
period are presented. As established by IAS 8 Net Profit or Loss for the Period,
Fundamental Errors and Changes in Accounting Policies need to be done
when a change in accounting policy has:

Justification
for change
Value
corresponding
adjustments
Disclosure
of change
For so designated by the Law
It is considered that the change will lead to
a more appropriate presentation of the
financial statements of the business
enterprise.

They can be:

CHANGES IN ACCOUNTING POLICIES

CLASSIFICATION
The accounting policies are the principles , bases , conventions , rules and
procedures used by the business enterprise in preparing and presenting
financial statements in accordance with International Accounting Standards
and has been used to make a change and this can be classified although
not specified in IAS 8 , in the following categories :


Changes in
accounting
principles
Change in
accounting
estimate
Change in
reporting
entity
1. Changes in Accounting Principles.-
In order that the accounting information is comparable, the consistency
principle requires that once adopted a criterion in the application of
accounting principles.

Consequently, only in exceptional circumstances allow a change in
accounting policy.

Includes both changes in accounting principles, the application of these for
example:
- Change in valuation of stocks
- Change in accounting treatment
- Changing the inventory method
- Change in profit or loss
CHANGES IN ACCOUNTING POLICIES

2. Changes in Accounting Estimates. -
Because of the uncertainty inherent in the business, the
company must make estimates to value some items in the
financial statements, which can not be measured accurately.

Changes in estimates are due to changes in the conditions
underlying the estimate or further information to knowledge,
time or occurrence of new facts, and make it necessary to revise
the estimate made at the time.

Changes in estimates can be distinguished from accounting
changes.

Example: a change in the method of depreciation is an
accounting change, while a change in life is a change in an
estimate.
MAKING CHANGES IN ACCOUNTING
MAKING CHANGES IN ACCOUNTING
3. Correction of Errors. -
It may be the fact that errors in an exercise in preparing the
financial statements of one or more prior periods that have
been finally approved by the competent body is detected.

It may be arithmetic errors in the application of accounting
principles, interpret economic events, and other omissions.
When the error has a significant effect on the financial
statements of one or more years, the financial statements
can not be considered reliable at the date they were issued.

These errors, IAS 8 are considered "fundamental errors". Be
remedied by the time they are discovered.




VOCABULARY

1. Final accounts: The accounts are codes that have been assigned to
an individual concept and distinguishes them from other, such
accounts can no longer move or change in certain situations
2. Accumulated: Join other elements to add its effect:
3. Change: Implement, establish laws, accounting policies.

4. The bank overdraft: The bank overdrafts allow the company to have funds to cover any gaps as
cash purchase of assets, working capital finance, etc.
5. Settings: At the end of the accounting period, the accounts must present their actual balance,
because these values serve as the basis for preparing financial statements. When account
balances are not real need to increase them, decrease or correct by an accounting entry called
adjusting entry.
6. Audited Accounts: The term audit the activity consisting in the review and verification of
accounting records, provided that it has the purpose of issuing a report that may have effects on
third parties. The audit of financial statements is to check and determine if these statements give
a true and fair view of the assets and financial position of the company or audited entity.

VOCABULARY